TOKYO (MNI) – An unidentified Bank of Japan board member said the
additional stimulative impact of the expansion of super-low, fixed-rate
money market operations was limited, the minutes of the April 6-7
policy-setting meeting released on Monday showed.

“One member expressed the view that additional effects on interest
rates on term instruments had been marginal so far, partly because room
for a further decline in these interest rates had already been limited,”
the minutes said.

Meanwhile, “some members pointed to the fact that interest rates on
term instruments on the whole had declined somewhat, yields on T-Bills
had been stable at low levels and Euroyen rates, which had previously
been more or less unchanged, had decreased,” they said.

At the March 16-17 meeting, the BOJ board voted 5-2 to double the
super-low interest lending facility to Y20 trillion, with board members
Miyako Suda and Tadao Noda voting against the proposal.

The decision to inject additional funds to cover three-month cash
needs among commercial banks also included doubling the frequency of the
new operation launched in December to twice weekly.

“Some members expressed the view that the expansion of the
fixed-rate operation conducted in March had reaffirmed the bank’s stance
of continuing to consistently make contributions as the central bank,
and that this had helped underpin business confidence,” said the minutes
of the April 6-7 meeting.

“A few members said that such reaffirmation of the bank’s stance
and the consequent improvement in business confidence might have
affected, to some extent, stock prices and foreign exchange rates
recently,” the minutes showed.

At both the April 6-7 and April 30 policy-setting meetings, the BOJ
board voted unanimously to maintain the target for the overnight lending
rate among commercial banks at 0.1%, the lowest possible level without
hurting market functions.

After conducting a string of credit-easing measures to inject
liquidity into the banking system, the central bank has noted that
corporate funding is becoming easier for many firms as costs of raising
cash among lenders have fallen.

“Financial conditions, with some lingering severity, have shown
increasing signs of easing,” the BOJ said in its monetary policy
statement on April 7.

This is slightly more upbeat than its statement in the previous
month that “the financial environment, with some lingering severity, has
continued to show signs of improving.”

hinoue@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4833 **

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